About $10 million was eliminated from the U School of Medicine’s budget because of a state health department funding error, but the money won’t be reinstated even if the state wins the appeals process8212;which could mean the medical school won’t enroll as many students.
“We won’t be able to use this source of funding for the medical school,” said Kim Wirthlin, U vice president of government relations. “The combination of the loss of the $10 million, plus the loss of additional funds, means the School of Medicine will have effectively lost 40 percent of the money they had for teaching.”
Administrators for the medical school said this reduction would likely lead to cutting class sizes.
The cut began when the Centers for Medicaid and Medicare Services reported the state health department overbilled the federal department by requesting regular funds, including money for managed plans such as HMO, PPO, prepaid and other health care plans.
CMS gives money to the Utah Department of Health based on the number of Medicaid and Medicare patients treated at University Hospitals and Clinics every year, and sends additional funds for residents’ salaries and teaching at the medical school.
“We have told the state for a couple years now that the way they were calculating it was just flat -out wrong,” said Mike Fierberg, a spokesman for CMS in Denver.
The School of Medicine, which was not suffering from state budget cuts as large as most departments on campus, is subject to a 40 percent budget cut and is begging for legislative assistance.
“And when it comes down to the School of Medicine, the decision is irreversible,” said medical school Dean David Bjorkman in February.
The U had requested funding from the Utah Legislature but without any luck.
Wirthlin said she and Bjorkman talked with several members of the executive appropriations committee who “seemed receptive” to the idea of funding the medical school, but they are still short on their budget.
Bjorkman said they’ve been looking at whether or not departments need to make certain expenditures and how to cut back.
According to CMS, the error started when the state health department requested funds Nov. 2 and Nov. 9 for almost $13 million and about $9 million, in addition to a standard quarterly payment of about $4 million. However, CMS discontinued about $32 million in funds, which was regularly distributed to the medical school, to pay salaries of residents, and to fund the U Hospital for treating Medicaid and Medicare patients. Fierberg said the state billed the federal department too much based on incorrect calculations.
“There were two things they identified as being problematic with the way the state plan was being executed,” Wirthlin said. “One had to do with the number of payments the health department was making to University Hospitals and Clinics. The second issue had to do with the formula to determine how much each payment should be.”
The state included funding requests for health care plans such as HMO and PPO, Fierberg said. CMS responded by deferring a request amounting to nearly $22 million in May and later decided to disallow an additional $10 million, which was usually sent to the medical school.
The health department is appealing the decision to disallow funds through CMS, and said the money wasn’t calculated incorrectly, said Gordon Crabtree, chief financial officer for University Health Care.
Even if the state succeeds in appealing the decision to withhold payments, the medical school will not receive the expected annual $10 million from CMS ever again, Wirthlin said.
For students, this could have negative consequences on their education and the number of students accepted into the U’s medical school.
Wade Daniels, a third year medical student at the U, said it’s a “tragedy” the medical school will have to cut the number of students attending, especially considering the national shortage of physicians. The U accepts a few more than 100 students each year.
“They’re doing it so they don’t hinder the educational quality of the students coming in and the ones already here,” Daniels said. “It’s sad the state couldn’t help with funding.”
Wirthlin said the Legislature could still fund the medical school, but the 2009 session ends tonight.